Happy New Year! The final scorecard for 2025 is in. One legacy giant managed to silence every critic and close the year with a historic market comeback. While the investors celebrate, the leaders are changing the script. Microsoft’s CEO just released his roadmap for 2026. He believes the era of "showmanship" is officially over. Meanwhile, Hollywood’s biggest star is starting the new year with a harsh warning about the "soulless" future of entertainment. The hype cycle is ending. The reality phase has begun.
In today’s Generative AI Newsletter:
Google closes 2025 with its best stock run in sixteen years.
Satya Nadella predicts 2026 will be about utility over benchmarks.
Leonardo DiCaprio warns that AI art is destined to be forgotten.
Jarts reveals if AI models are recommending you to users.
Latest Developments
Google’s Best Year Since 2009
Gemini traffic triples as ChatGPT usage falls
Benoit Tessier | Reuters
Alphabet closed 2025 with a 65% stock surge, its most explosive year on Wall Street since the 2009 recovery. After an early 18% dip, the company silenced skeptics by rapidly integrating Gemini into its core search and cloud businesses. Google outpaced every trillion-dollar peer, including NVIDIA and Broadcom, to reclaim its position as a market leader. By the final bell on December 31, the narrative had shifted from Google being disrupted by AI to Google dominating the sector through sheer distribution power.
Key drivers of the rally:
Market Share Growth: Gemini’s share of AI traffic jumped from 5% to 18% this year, while ChatGPT’s dominance slipped from 87% to 68%.
Legal Relief: U.S. District Judge Amit Mehta ruled against the most severe antitrust penalties, allowing Google to remain the default search engine on iPhones.
Engineering Talent: Google paid $2.4B to license technology and hire top staff from coding startup Windsurf after their deal with OpenAI collapsed.
Infrastructure Investment: Total capital spending reached $93B to meet soaring demand for AI models and data center capacity.
Alphabet’s comeback demonstrates how a legacy titan can weaponize its massive user base to overtake a fast-moving startup. By embedding Gemini into Android and Chrome, Google made its AI the path of least resistance for billions of people. The company's massive spending reflects the high cost of maintaining this lead, with analysts projecting expenses to hit $114B in 2026. As the market enters the new year, Google’s primary challenge is no longer technological relevance but managing the intense expectations set by its record-breaking performance.
Satya Nadella’s 2026 Vision
AI must support real humans, not just benchmarks
The Aspen Institute Photograph by Stuart Isett/Fortune Brainstorm TECH
Satya Nadella is calling for an end to the era of AI showmanship as the industry enters a high stakes transition toward utility. In his 2026 outlook, he argues that the speed of technical breakthroughs has created a model overhang where capabilities far outpace real world impact. Microsoft is moving the focus to a phase where software must prove its value through actual results.
The move toward orchestration:
System coordination: Success depends on how different tools work together rather than the performance of a single bot.
Public trust: Societal permission must be earned by solving tangible problems for people and the planet.
Supportive structures: Digital agents function as scaffolding that allows employees to focus on high value work.
Staffing shifts: Teams must reach a new equilibrium that accounts for colleagues equipped with autonomous AI tools.
Nadella’s outlook provides a necessary cooling period for a market that has spent years obsessed with its own potential. By focusing on how systems finish tasks, he reveals that the smartest model is useless if it cannot navigate a corporate bureaucracy. The industry’s most valuable players in 2026 will be the architects who build useful systems instead of just chasing the next frontier.
DiCaprio Slams AI Filmmaking
Actor warns that AI lacks a human soul in art
Antony Jones / Getty Images
Leonardo DiCaprio has become the latest Hollywood heavyweight to dismiss AI as a threat to genuine artistry, labeling the technology's outputs as "internet junk." Named Time magazine's Entertainer of the Year for 2025, the Oscar winner argued that while AI might serve as a technical tool for young filmmakers, it lacks the soul necessary to create something lasting. His critique joins a growing chorus of A-list resistance as studios move toward deeper automation. This tension between high-tech efficiency and human imperfection is becoming the central drama of the modern film industry.
What the critics are saying
Authenticity Gap: Leonardo DiCaprio noted that AI mashups can be technically brilliant but eventually dissipate into the ether because they lack a human anchor.
Radical Rejection: Director Guillermo del Toro used his Vanguard Tribute at the Gotham Awards to declare he would rather die than use generative AI in his films.
Actor Protection: James Cameron banned generative AI from his Avatar sequels to ensure human performances are never replaced by text-to-video prompts.
Writer Irritation: Screenwriter Emma Thompson described Microsoft's AI writing suggestions as an intense irritation that ignores the vital connection between the brain and the hand.
This resistance from Hollywood's top tier highlights a deepening divide between the craft of storytelling and the business of content production. While actors and directors fight to keep the "human" in the loop, the sheer volume of AI-generated media is already reshaping how audiences consume entertainment. DiCaprio’s warning suggests that the ultimate price of automation might not be the loss of jobs, but the loss of cultural memory as art becomes a disposable commodity.
Tool of the day
Jarts.io: Tracking Whether AI Recommends Your Business
Source: Jarts
People are increasingly asking ChatGPT, Perplexity, and other AI tools what to buy, use, or trust. Jarts helps you understand whether your product shows up in those answers and why or why not. The goal is not rankings, but visibility inside AI responses.
Here is how to actually use it:
• Add your website: Enter your domain. No technical setup required.
• Define real buyers: Jarts generates customer personas automatically. Edit them to reflect real users, not generic roles.
• Run AI questions: The tool simulates realistic questions people ask AI, like “best tools for small startups.”
• See the results: You can see whether your brand is mentioned, how it is described, and which competitors appear instead.
• Track AI sources: Jarts shows which sites the AI models are pulling information from.
How to use the insights:
• Update your content: Add missing explanations to FAQs and pages where AI seems confused or silent. • Publish strategically: If AI systems cite Reddit, directories, or niche blogs, focus your effort there.
• Check regularly: AI answers change often. Short weekly reviews help you learn what is working.
Jarts is most useful when treated as a learning tool. It shows how AI understands your product today so you can shape how it explains you tomorrow.
